Japan Factory Activity Shrinks For 8th Straight Month
Japan’s factory activity continued to decline for an eighth straight month in February but at a slower pace, a private sector survey showed Friday, in a sign that struggling factories may be finding their footing.
While business spending was the main contributor to Japan’s GDP growth in the last quarter, the manufacturing sector remained tepid, even before U.S. tariffs on cars and other key Japanese exports took effect.
The Au Jibun Bank Japan flash manufacturing purchasing managers’ index (PMI) bounced back to 48.9 from 48.7 in January, which hit a 10-month low. While still below the 50.0 threshold that separates growth from contraction, the slight increase suggests a modest recovery.
The improvement was driven by milder declines in output and new orders, two key components of the manufacturing PMI.
Looking ahead, “confidence about business activity growth over the next 12 months weakened in February,” according to Usamah Bhatti, an economist at survey compiler S&P Global Market Intelligence. Among manufacturers, expectations for future output were the lowest since June 2020.
“Firms cited labor shortages, persistent inflation and economic weakness in the domestic economy as factors that weakened overall sentiment,” Bhatti said.
The sub-index showed employment declined for the first time since November, while input prices continued to rise at a faster pace than the previous month.
In contrast to the weak manufacturing sector, the Au Jibun Bank flash services PMI posted a further increase to 53.1 in February from 53.0 in January, thanks to continued expansion in new businesses supported by strong demand.
Source: Investing.com
